EXCLUSIVE: Lafarge Africa Boss Jets Into Zimbabwe for Crucial Talks With President Mnangagwa

HARARE – Lafargeholcim regional head for Africa and the Middle East, Miljan Gutovic has flown into Zimbabwe for crucial talks with President Emmerson Mnangagwa’s government before pouring fresh capital to expand the firm’s operations in Zimbabwe, according to a highly placed executive with knowledge of the meeting.

The executive said Gutovic was
due to meet Mnangagwa on Monday afternoon.

“Lafarge does not invest in
any country without meeting its leaders to get assurances that their investment
will be safe,” said the executive who spoke on condition of anonymity because
he is not allowed to speak to the press.

“This is why Gutovic is here
to meet President Emmerson Mnangagwa. Assessments for the establishment of a
new plant have been completed and this is the last step towards rolling out the
project,” the source said.

Gotovic sits in the Lafargeholcim
global executive committee where he was appointed in July last year.

He reports to the global cement maker’s CEO, Jan Jenisch. No comment could immediately be obtained from Lafarge Zimbabwe.

The talks come as the Zimbabwe
Stock Exchange listed Lafarge Zimbabwe said last week growth during the year to
December 31, 2018 would be robust, driven by sharp spikes in demand for house
construction.

This will add to an investor
flight into the real estate sector, as the markets seek to hedge against
hyperinflation induced shocks projected during the year, according to Lafarge
chairman, Kumbirai Katsande.

A relentless surge in inflationary
pressures since the second half of 2018 has unsettled a cross section of
industries in the troubled southern African country.

But Zimbabwe’s second largest
cement maker sees this flight to safety as a bedrock for its operations, and
even sees itself emerging as the market leader at the end of 2019, toppling PPC
Cement.

Katsande last week said in a
commentary accompanying the firm’s financial results for the year ended
December 31, 2018 that Lafarge had returned to the black during the period, posting
$1,3 million in after tax profit, from a $609 000 loss during the prior
comparable period.

Much of the recovery was
underpinned by the return of demand in the aftermath of the ouster of
Zimbabwe’s long-time ruler, Robert Mugabe in November 2017, which unlocked public
sector opportunities in infrastructure rehabilitation and private sector-led
housing construction.

Lafarge’s profit tracked
revenue, which climbed by 24 percent to $72,3 million during the review period,
from $58,4 million during the same period in 2017 after significant price
adjustments in the final quarter.

Lafarge also rolled out a
strategy to concentrate on high quality cement.

Revenue was boosted by the
consolidation of its regional network, according to Katsande.

“Revenue was up by 24 percent
of prior year due to the better average selling price achieved following price
adjustments in the last quarter of the year and a favourable product mix skewed
in favour of high strength cements,” Katsande said.
“The business expanded
its distribution footprint into the regional markets. Management believes that
demand for cement will continue to be firm in 2019 as housing remains the only
stable investment to unlock value against inflation. As such, the business will
focus on improving profitability in the anticipation of closing the year strong
and in the lead. This will be done by implementing measures to improve plant
reliability, creating and developing new business avenues through product
development and growing the franchise channel, building stronger and more agile
teams and restoring value through interventions such as asset protection,”
Katsande noted.